What They Do
Wix operates website building platforms that enable small businesses and individuals to create professional websites without coding knowledge. The company generates revenue through subscription plans, transaction fees from e-commerce functionality, and premium services, serving millions of users globally who need an online presence but lack technical expertise.
Investment Thesis
**Explosive acquisition momentum**: Base 44 reached $100M ARR in just 9 months post-acquisition, making it one of the fastest-growing software platforms in history with new user acquisition at two-thirds the rate of core Wix**AI transformation accelerating**: Wix Harmony launched globally as a unified AI-powered creation platform, showing strong early conversion and monetization metrics with plans to become the default user experience**Aggressive capital returns**: Management plans to complete majority of $2B share repurchase program in 2026 plus secured $250M equity investment from Durable Capital Partners, demonstrating confidence in cash generationKey Risks
**Margin pressure from AI investments**: Q4 gross margins declined to 68% due to Base 44's AI compute costs, with free cash flow margin guidance lowered to low-to-mid 20% range**Currency headwinds**: Material impact from USD weakening against Israeli shekel creating revenue translation challenges for 2026 outlookGrowth Story
Revenue growth remains solid at 14% with consolidated ARR reaching $1.84B (+14% YoY), driven by Base 44's hyper-growth trajectory and core Wix platform stability. The company projects mid-teens percentage growth for 2026, with Base 44 expanding into enterprise markets across tech, banking, healthcare, and government without requiring a traditional sales team. Total projected 10-year value of existing cohorts grew 14% YoY to over $20B, indicating strong customer lifetime value expansion.
Profitability Profile
Wix maintains healthy gross margins at 68% despite AI investment costs, with Q4 operating margins at 15% and strong free cash flow generation of $605M (30% of revenue) in 2025. The core Wix business shows sequential improvement in both gross and operating margins, while Base 44 already achieved positive non-GAAP gross margins and is expected to improve throughout 2026. Free cash flow margins are expected to moderate near-term as the company invests aggressively in Base 44's scaling.
Competitive Position
Wix holds a leading position in the website building space with over $20B in projected customer lifetime value, competing against players like Squarespace and WordPress. The company's differentiation comes from its AI-powered Wix Harmony platform and the acquired Base 44's enterprise capabilities, creating a broader addressable market beyond traditional small business website building. Base 44's viral growth model and enterprise traction without sales teams suggests a unique competitive moat in the no-code/low-code space.
Recent Momentum
Q4 2025 showed mixed results with revenue beating estimates by modest amounts while EPS consistently outperformed expectations, though revenue growth decelerated slightly from prior quarters. The standout story was Base 44's remarkable $100M ARR milestone and Wix Harmony's global launch, signaling successful execution of the company's AI and acquisition strategies. Management's aggressive share buyback acceleration and Durable Capital's strategic investment indicate strong institutional confidence.
What Wall Street Thinks
Analysts appear cautiously optimistic given the consistent EPS beats and Base 44's exceptional growth, though revenue performance has been mixed with some quarters showing slight misses. The mid-teens growth guidance for 2026 suggests Wall Street expects continued momentum, while the wider free cash flow margin guidance range reflects uncertainty around Base 44's investment requirements. The $250M institutional investment and aggressive buyback program likely signal positive analyst sentiment on capital allocation.
The Bottom Line
Wix is transforming from a traditional website builder into an AI-powered platform company, with the Base 44 acquisition proving to be a home run that's accelerating growth while the company aggressively returns capital to shareholders.
